More financial information this week
What’s happening with our bank accounts and credit/store cards
The first £500 of authorised overdrafts can be interest-free for 3months (for overdrafts under £500, the entire balance will be interest-free).
Those with accounts that have an overdraft facility, who are struggling due to coronavirus, should be able to request one of these 0% overdrafts, subject to a credit score.
To be fair, many banks were offering some easing anyway, but this deletes the ‘lottery’ element. After all, no one chose a bank based on how well they’d behave in this never-imagined crisis
Please check what your bank is doing. Many have sent texts to inform us of their policies during this time.
Your credit cards, store cards, personal loans and catalogues
They all must offer a payment holiday
The FCA also proposes that all lenders will be expected to move towards offering payment holidays of up to 3mths on personal loans, credit cards and catalogue debts – so if you can’t pay, you won’t need to.
Don’t just stop payment though – you need to agree with them.
Once done, these payments aren’t allowed to hurt your creditworthiness, nor can there be any penalties or charges if you do, you can’t lose a 0% deal either
-Is it worth taking a payment holiday?
Yes if you have an emergency cash flow need, no if not. That’s especially true if the interest rate is high, as it’ll still rack up during the payment holiday, and as you’re not making repayments it can be hefty. So only do this if you need it.
– Does this apply to car finance, payday loans & other short-term credit too?
No, although I hear at least with car finance, the regulator is likely to make an announcement soon, though lenders are already required to show forbearance to customers.
Janet April 2020